General Moly said it has entered into a letter
of intent with POSCO, the world’s third
largest steel producer, that gives POSCO
the right to acquire a 20% interest in
General Moly’s Mount Hope molybdenum
project located in central Nevada, subject
to negotiation and execution of final documentation.
In order to facilitate the investment,
General Moly plans to form a new
entity that will operate the Mount Hope
project on a joint venture basis, and based
on terms of the letter, it is anticipated that
POSCO will make equity contributions to
the joint venture totaling $170 million,
including $50 million upon signing of
definitive documentation, $50 million on
July 1, 2008 and $70 million upon receipt
of all material permits required to initiate
full construction of the Mount Hope project,
which is expected in the first quarter
of 2009. POSCO will have rights to 20% of
production from Mount Hope and will be
responsible for 20% of total project capital
and operating costs from January 1, 2008
onward.
General Moly said it expected that the
transaction would close prior to the end of
January 2008. It also noted that it will continue
to selectively seek additional off-take
arrangements, with the goal of establishing
approximately 10 million lb/y of production
over the first five years of production. The
molybdenum for these off-take arrangements
will be sourced from General Moly’s
80% of production.
POSCO intends to invest in the joint
venture through its Canadian subsidiary,
POSCO-Canada, and a Korean domestic
subsidiary.
As featured in Womp 08 Vol 1 - www.womp-int.com